By Akash Sriram and Abhirup Roy
(Reuters) -Electric vehicle (EV) maker Lucid Group Inc reported lower-than-expected first-quarter revenue on Monday and trimmed its 2023 production forecast as a price war sparked by Tesla, rising interest rates and recession fears hurt sales.
Shares in the maker of the Air luxury sedan dropped about 9% in after hours trade.
Tesla Inc’s move to cut prices and increase volume, a strategy which CEO Elon Musk said is part of the EV maker’s recession playbook, as well as lower-priced electric models launched by traditional automakers have hurt startups such as Lucid and Rivian Automotive Inc.
“I believe that there is a challenge to the entire market right now because of macroeconomics and because of interest rates,” Lucid CEO Peter Rawlinson told analysts.
Lucid, faced with mounting losses, has largely shied away from lowering prices on the Air luxury sedan that starts at $87,400, and Rawlinson did not announce any plans for further cuts.
Instead, Lucid said in late March it would lay off 18% of its workforce, or about 1,300 employees across the organization as part of a restructuring plan to rein in costs.
The company reported quarterly revenue of $149.4 million, compared with analysts’ average estimate of $209.9 million, according to Refinitiv. It last month reported first-quarter production and delivery figures lower than in the preceding three months.
“The revenue was actually the weakest that’s been since the second quarter of last year, so there’s a big miss on the top line,” said Garrett Nelson, analyst at CFRA Research. “This could be an indication that this pricing war is having a direct impact on their results.”
Rawlinson said on Monday the company was on track to produce over 10,000 vehicles in 2023, compared with an earlier forecast for 10,000 to 14,000 units this year.
The first quarter net loss widened to $779.5 million from $604.6 million a year earlier, while cash and cash equivalents fell to $900 million at the end of the first quarter from $1.74 billion in the fourth quarter.
Chief Financial Officer Sherry House said the company had $4.1 billion in liquidity, enough to fund the luxury EV maker at least into the second quarter of next year.
The EV maker is set to unveil its Gravity sport utility vehicle later this year ahead of its launch in 2024.
Rawlinson said that the company was also in talks with multiple parties on licensing and selling its powertrain technology, but he declined to provide details.
(Reporting by Akash Sriram in Bengaluru and Abhirup Roy in San Francisco; Editing by Vinay Dwivedi and Jamie Freed)